CHAPTER-III

Present Institutional Infrastructure For Export Promotion

In India

40

3.1 INTRODUCTION

It is an holistic fact that exports of any developing country like India

need’s guidance and assistance form various institutions at different

stages of its exports. For this purpose the government of India has set up

several institutions which are functioning to help an exporter in his work

through assistance and incentives under various schemes .Exporters in

India have been acquainted with the functions of these institutions and

the nature of help that such institutions can render to exporting

community, exporters have often been advised to contact these

institutions so that they can become clear about the help they can expect

from organized sources in their export promotion effort. Institutions

engaged in export promotions efforts in India can be classified in to six

different categories.

The Department of commerce in the ministry of commerce,

Government of India, is the apex institution which is concerned with organization, co-ordination and formulation of India’s trade policy1. At

the second level these are deliberative and consultative organizations

which ensure that the country’s export problems are dealt with

comprehensively after mutual discussions between the government and

the industry. At the third stage, the commodity specific organizations

ideal with the problems relating to individual commodities or group of

commodities. At the fourth level there are service institutions which

facilitate and assist our exporters to expand their business and reach

more effectively to the world markets. The fifth level institutions

comprise of those organizations which are directly engaged in import

41

and export activities and handle export and import problems relating to

different commodities for the purpose of supplementing the exports of

private institutions in the field of export promotion and export

management.

At the sixth and last level various export promotion bodies set up by

the state government are functioning for export promotion purchases.

3.2 The Ministry of Commerce Government of India/

1

2

3

4

5

6

7.

International Trade policy Division.

The foreign Trade Territorial Division.

The state Trading Division/the public sector trading corporation.

The export Industries and production Division.

Economic Division.

Consultative division (committees and Boards)

Commercial representatives abroad2.

8-K.U. U«WBACC. NolP84'=^-

(all. No.

42

3.3 COMMODITY ORGANISATIONS

1 Export promotion councils.

2 Commodity Boards.

3 Marine produce of Export Development Authority.

4 Agricultural and processed food product export Development authority3.

3.4 SERVICE INSTITUTIONS

1 Indian institute of foreign Trade.(I.I.F.T.)

2 Trade Development Authority (T,D.A.)

3 Indian institute of packaging (I.I.P.)

4 Trade Fair Authority of India (T.F.A.I.)

5 Federation of Indian exporters organization.(F.I,E.O,)

6 Directorate General of commercial intelligence and statistic

(D.G, C.I. and S.)

43

7 Export Inspection council (E.I.C.)

8 Indian council of arbitration (I.C.A.)

9 Export credit Guarantee Corporation of India (E.C.G.C.)

10 Export -import Bank of India (EXIM-BANK).

3.5 GOVERNMENT TRADING ORGANISATION

3.6 EXPORT ORGANISATIONS AT STATE LEVEL

3.7 THE DEPARTMENT OF COMMERCE GOVERNMENT OF/

INDIA.

The department of commerce is the primary government agency

which is responsible for evolving and directing foreign trade policy and

programmes, including commercial relations with other countries, state

trading, various export promotion measures and development

regulations of several export oriented industries. This department has

different divisions looking after activities related with export promotion

in India4.

44

A brief description of different divisions is given as follows.

1 FOREIGN TRADE TERRITORIAL DIVISION

This division looks after the work relating to the development of trade

with different countries and regions of the world including trade negotiations,

trade delegations trade missions. This division handles matters pertaining to import export trade policy and control in respect of India’s trade interests5.

2 ECONOMIC DIVISION.

The economic division headed by the economic advisor which is

responsible for evolution of export strategies, export planning,

periodical appraisal and review of policies as also for maintaining of co­

ordination and constant contacts with other divisions as well as with

various organizations which have been set up under the commerce

ministry to assist the export drive6.

3 INTERNATIONAL TRADE POLICY DIVISION.

The main task of this international trade policy division is to keep

f^abraft of the development in the international organizations like

UNCTAD, GATT, the Economic commissions for Europe, Africa, Latin

America and Asia and far East. It is also responsible for Indias relations

with the European Economic community, European free Trade

Association, Latin American free Trade Area, other regional groupings

45

and comman wealth. It also looks after the generalized system of preferences and non tariff areas1.

4 THE STATE TRADING DIVISION

This division looks after the state trading activities and evaluates

the performance of STC, MMTC, and its subsidiaries. With a view to

supplementing the efforts of the private enterprises in the field of

foreign trade, a number of public sector trading corporations have been

set up by tHe Government, namely, the jstate Trading Corporation of India, and Minerals and Metals Trading Corporation.(MMTC).

Subsidiaries of S.T.C. are,

1 The Tea Trading Corporation of India.

2 The Handlooms and Handicrafts Exports Corporation of India.

3 The cashew corporation of India.

4 The projects and Equipment corporation.

5 Central Cottage Industries corporation8.

The M.M.T.C. has only one subsidiary namely Mica Trading

corporation. These corporations have produced the essential base for

developing and strengthening the efforts relating to specific

46

commodities and for diversifying the country’s foreign trade. Briefly

their activities are.

1. To arrange for exports where bulk handling and long term contracts

are advantageous.

2. To facilitate exports of difficult to sell items through various efforts

such as linking essential Imports with additional under link and parallel

deals.

3. To organize production to meet export demands and to help

production units to over come difficulties of raw materials and other

essential requirements to meet export orders and to develop lines of

export by various methods and

4. To under take imports of such commodities where bulk procurement

in advantageous.

These corporations’ handle actual transactions. And maintains offices

abroad and functions like any commercial house.

5 THE EXPORT INDUSTRIES AND PRODUCTION DIVISION

This division has there sub-divisions namely.

a) Export product Division.

47

b) Export Industries Division.

c) Export service Division9.

The Export product division pays attention to the problems

concerned with production generation of surplus and development of

markets for various products under its jurisdiction. Their products are all

agricultural commodities and products, marine products, chemicals,

plastic minerals and ores, coal, petroleum products, and mica salt.

Although in administrative terms, the responsibility for these products

remains with the ministries concerned to ensure that production is

sufficient to realize the fuel export potential.

The Export industries division is responsible for development

and regulation of textiles, including wool, jute, handicrafts and

plantation industries like, coffee, tea, rubber, cardamom. It also looks

after the organizations dealing with the respective products.

The Export services division pays attention for all problems of

export assistance including import replacement, licensing, for

assistance, export credit, export house, marketing Development zones,

dry port and quality control and pre-shipment inspection, guidance to

Indian entrepreneurs to set up joint ventures abroad, additions of

capacity to export oriented Industries including assistance to them to

import capital goods and essential raw materials to build up a sound

production base.

48

6 ECONOMIC DIVISION

The Economic Division headed by the Economic adviser, is

responsible for the formation of export strategies, export planning,

periodic appraisal and review of policies as also for maintaining co­

ordination and constant contacts with the other divisions as well as with

various organizations which have been set up under the commerce

Department to assist the export drive. This division also monitors work

relating to technical assistance, management services for export and

overseas investments by India entrepreneurs .

7 CONSULTATIVE AND DELIBERATE ORGANISATIONS

Various consultative and deliberative bodies have also been set

up to ensure that the collective advice of the commercial interests is

available to the Government of India for framing and formulating export

promotion policies for successful implementation thereof, in this

respect, Advisory council on trade, zonal export and import advisory

comities and cabinet committee on export, need special mention.

Recently the Government of India have revived and re-constituted the

board of trade to make it a more effective instrument in discharging its

consultative and deliberative functions.

49

3.8 COMMODITY ORGANISATIONS

A rising from the need for closer association of the trade in the

evolution of export promotion strategies, various commodity

organizations have also been established in the country. Most important among these are export promotion councils and commodity boards12.

1 EXPORT PROMOTION COUNCILS

At present there are 19 export promotion councils representing

such items as basic chemicals, pharmaceuticals, chemicals and allied

products, cotton textiles, Engineering goods, finished leather

manufactures, Gem and Jewellery, handloom goods, plastics and

linoleums, processed foods, shellac, silk and rayon textiles, spices,

sports goods, Tobacco And woolen goods. The main functions of these

export promotion councils are,

1) To appraise the Government with regard to trade enquiries and

opportunities.

2) To keep its members informed with regard to trade enquiries and

opportunities.

3) To help in exploration of overseas markets and identification of

items with export potential.

50

4) To assist overseas buyers with information relating to various

aspects of the Indian Engineering Industry and also bring them in

touch with reliable sources of supply in India.

5) To sender assistance on a specific problems concerning

individual exporters.

6) To offer various facilities to engineering exporters in time with

other exporting countries.

7) To help the member exporters in claiming various types of incentives from the Government13.

2. COMMODITY BOARDS

There are 9 commodity Boards, covering such items as

handicrafts, handloom, silks, coir rubber, coffee, tobacco and

cardamom. Theses commodity Boards deal with the entire range of

problems of production, development and marketing in respect of the

commodities concerned they act them selves as if they were the export

promotion councils. Some of these Boards have opened their branches

in foreign countries in order to promote the consumption of the commodities under their jurisdiction14. Similarly some of the Boards

have taken promotional measures by participating in trade fairs and

exhibitions, conducting market surveys, and sponsoring trade

delegations.

51

Supplementing the commodity organizations is in-charge of the

office of the Textile commissioner and the jute commissioner. The

textile commissioner is concerned with the development and regulation

of all textile Industries other than jute and coir. Jute commissioner is

concerned with the development of jute industry and jute mill

machinery industry.

3 MARINE PRODUCT EXPORT DEVELOPMENT AUTHORITIES

This Authority was established in 1970 and it started functioning

form September 1972. The functions of this Authority mainly include

the following.

1. Conservation and management of off shore and deep sea fisheries.

2. Promotion of marine products.

3. Registration of fishing vessels and storage premises relating to the

marine products Industry.

4. Development of off shore and deep sea fishing.

5. Providing marketing intelligence and free enquiry information to

fishery exports.

6. Acting as an agency rendering financial assistance.

52

7. Arranging training with special reference to fishing, processing and

marketing.

Act as an agency for extension of relief and subsidies which may be interested by the Government15.

4 AGRICULTURAL AND PROCESSED FOOD PRODUCT EXPORT

DEVELOPMENT AUTHORITY

This authorities was set up in February 1986 as a statutory body

replacing the processed food Export promotion council. It has

representatives of the respective ministries concerned state Government,

Industry and trade, and other research institutions. The object of

forming this authority is to develop and promote exports of horticultural

products, live stock products, processed foods, confectionery and other

agro based item of export potential. It also helps to mobilize export

value added agricultural products by quality and packaging improvements16.

3.9 SERVICE INSTITUTIONS

In order to meet the growing requirements of the industry and

trade, a number of institutions and organizations have been established

by the Government of India. The principle areas in which these

institutions have been active include development of export

management personnel, marketing research export credit and insurance,

53

export publicity, organization of trade fairs and exhibitions collection

and dissemination of marketing intelligence, preshipment inspection and

quality control, development in packing etc, the principle service institutions in the country are given as follows17.

1 TRADE DEVELOPMENT AUTHORITY (TDA)

Trade Development Authority was set up in 1970, under the

society’s registration Act, 1860, m scale sectors which would spearhead

the exportive in the identified products. For providing packaging

assistance to business entrepreneurs at the microlevel after identifying

the potentials of their assistance had also been functioning effectively. It

is a non profit body under the ministry of commerce and it provide

comparahensive range of service to exporters. The objectives of this

organization are:

1. To identify and nurture specific export products.

2. To identify and surface specific export worthy production mainly in

small and medium scale sectors which would separated the export drive

in the identified products.

3. To identify and cultivate specific buyers in sected markets having

increasing trade potential and to bring about durable merchandising

contract between the selected India suppliers and the over seas buyers.

4. To assist the technically competent units in product development and

adaptation.

54

5. To organize collection and dissemination of trade statistics and

commercial information on scientific and systematic basis and to

provide package and services to execute such contracts and

6. To promote and assist the creation of additional capacities in sectors which have increasing export potential.18.

Being a non - commercial institution TDA acts mainly as a

catalyst and strives to concentrate on specific products, specific

exporters, specific markets and specific buyers. The Trade development

authority has four divisions, namely merchandising, Research and

Analysis. Trade information and statistics, and Administrative Division.

The major activities and programmers usually implemented by the

TDA includes.

1. Export promotions through buyers seller meets, trade fairs and

exhibitions, contact promotion programmes, programme with the CFTC

assistance, product development.

2. Research and Analysis Activities through short term forecast of

Indian exports, interfirm comparison studies overseas E.T.C.

Trade information Activities through organizing seminars and workshops training on trade information and export marketing E.T.C.,9.

55

2 INDIAN INSTITUTE OF FOREIGN TRADE (I.I.F.T.)

Indian institute of foreign Trade was established in 1964 is being/

serving the Indian export sector with the principal activities.

1. It provides training of high standard, short term and long term for

executives and personnel employed in trade and industry export houses,

export organizations. Government departments, Government trade

corporations .and Indian Embassies and consulates abroad. Such training

programmes are run by this institute for developing specialization in

technical methods and in international trade.

2. The Institute sponsors can debates selected form industry and trade,

export houses, Government departments, trade corporations E.T.C. for

higher training abroad in export management and export techniques to

acquire first hand knowledge of the techniques and procedures adopted

by advanced countries in export marketing.

3. The Institute plans organizes, undertakes, sponsors and commissionst

marketing research and area studies in foreign countries in accordance

with a planned programme in order to ascertain the characteristics of the

overseas markets and consumer preferences, assess the correct and

potential demand for Indian products and determine the scope and the

techniques to be adopted for an increased absorption of Indian products

in these countries. It also undertakes, commodity studies with in the

country with a view to locating new products or developing new uses of

56

existing products with export potential and drawing up long term

programs for their development, processing and export.

4. It undertakes and sponsors practical as well as fundamental research

on various problems of international trade. In spite of its own research

partners the institute undertakes research problems referred to it by the

industry trade and the Government.

5. It also provides consultancy to business firms relating to foreign trade

6. The Institute disseminates information through its quarterly journal

“Foreign Trade Review” and its monthly journal “Foreign Trade Bulletin”20.

Along with theses services the Institute also maintained a well

furnished library which consists of large number of volumes relating to

international trade and related subjects.

3 TRADE FAIR AUTHORITY OF INDIA (T.F.A.I.)

The TFAI is a service institution functioning under the

Development of commerce in boosting up Indian exports. The TFAI is a

model agency for organizing trade affairs and exhibitions in India and

abroad and has made good progress during recent years in promoting

trade through the medium of fairs and exibitions .

57

It continued to try and bridge the information gap about the

Indian achievements in the field of agriculture. Small medium and

heavy industries, mineral development and other aspects of the

economy including the projection of export capabilities of the nation as

a whole.

4 The main objectives of the T.F.A.I

Includes:

> To promote, organize and participate in trade fairs and

exhibitions in India and aboard.

> To set up show rooms and shops in India and abroad.

> To undertake training activities in commodities relating to

fairs and exhibitions.

> To develop exports of new items for diversification and

expansion of Indian exports.

> To provide infrastructural facilities to interested organiza

-tions for holding fairs and exhibitions at its para - dimensional complex.22.

> To project India’s image as an industrially and technologi

-cally advanced nation in diverse fields, and thus towards

trade promotion.

The TFAI play*, important role in disseminating information in

India and aboard, various achievements of the Indian economy and the

58

technological and business potential of the country. Regular

publications are brought out and the multi-media campaigns are

organized, It brings out regularly four journals namely journal of

Industry and trade, Udyoga Vyapar Patrika, Indian exports services

bulletin and Economic and commercial news.

5 INDIAN INSTITUTE OF PACKAGING

The Indian institute of packaging was established as a society in 1966 jointly by the Ministry of Commerce and the packaging of Allied

Industries in the country and given the responsibility of bringing about

improvements in the standards of packaging in the country particularly

for exports. During the last 25 years a large number of activities have

been developed and implemented by the institute, to meet the

responsibility of export packaging. It has on its rolls over 800 members

including the producers of packing materials and converters of

packaging materials into packages as also a large number of users of packaging.23.

l.I.P. is also maintaining packaging standards of Indian products

to match with standards required for sophisticated markets so that our

export items can effectively compete with the packaged products

emanating form the developed countries.

6 FEDERATION OF INDIAN EXPORT ORGANISATIONFIEQ^an Apex body^was set up in 1965 as a command and co­

coordinating platform for various export organizations including the

59

commodity council, boards, service institutions and organizations. The

principal objectives of the FIEO are indicated as the following;-

❖ To promote the development of export trade, and co-ordinate the

export promotion activates.

❖ To sponsor study teams to send trade delegations abroad and to

invite trade delegations form abroad.

❖ To sponsor and undertake commodity and market survey.

❖ To conduct meetings and conferences, seminars and workshops

to provide an opportunity to all sectors of the exporting

community and export promotion institutions in India and to

review, discuss and formulate recommendations to the

Government, and other Authorities on problems, prospects and

potentials of India’s exports.

❖ To invite leading business magnets and economic and trade

missions form abroad specially for at our of industrial and

commercial centers in India.

❖ To project Indian goods and services through various media

including films, Exhibitions advertisement sand publications.

❖ To establish relations with overseas chamber of commerce, trade

associations and Government departments.

60

❖ To sponsor special projects relating to export promotion of

India’s consultancy services.

❖ To sponsor out going multi media interests, trade and economic

missions and special terms of Government recognized export

houses, consultancy firms small scale industries and individual

study sales teams.

❖ To execute projects and responsibilities entrusted to it from time

to time by the Government of India and serving as a forum for

two way transmission of views and information’s between Government. Department’s and exporting community24.

7 DIRECTORATE GENERAL OF COMMERCIAL INTELLIGENCE

AND STATISTICS (DGCI & S).

The D.G.C.I. and S is located at Calcutta. The main functions of

the Institute is as follows.

1) Collection and compilation of commercial information required

by the government and the trade.

2) Amicable settlement of trade disputes arising between Indian

exporters and foreign buyers.

61

3) Maintenance of commercial (Exports and Imports) library in

Calcutta.

4) Publication of periodical reports received from India’s trade

representatives stationed in foreign countries with regard to economic consideration and trade prospects25.

8 INDIAN COUNCIL OF ARBITRATION

The Indian Council of Arbitration was set up in 1965 as an apex

body to promote and encourage amicable settlement of trade disputes

keeping in view of growing number of trade disputes. The main

functions of the council are as fallows;

• To collaborate with international bodies in matters concerning to

international commercial arbitration.

• To arrange regular meetings with Export promotion councils,

public sector undertakings, chambers of commerce, Trade

associations E.T.C.

• To discuss the problems of settlement of disputes by arbitration

process.

• To arrange arbitration of trade disputes in international trade

through it’s constituent members.

• To maintain panel of members as arbitrators u.

62

9. EXPORT INSPECTION COUNCIL

In consonance with the need for constant improvement in quality

of Indian export products and for gaining the confidence of our

importers abroad in respect of the quality of Indian exports, The

Government of India established the ExportInspection Council under the

provisions of export quality control and preshipment Inspection Act of

1963. The council mainly administers the schemes of quality control

and preshipment Inspection. The council is also charged with the

responsibility of establishing laboratories and test houses throughout the

country for the provision of Inspection facilities in regard to the

commodities thus notified. Almost 90 % of export commodities

covering more than several hundred items have already been brought

within the purview of this Act and are subjected to compulsory pre shipment Inspection.27

10 EXPORT CREDIT GUARANTEE CORPORATOION

With the view of minimizing the risk element in export business and

to facilitate the flow of finance from the banks to exporters, Export

credit Guarantee Corporation was established. In addition to the normal

risk policies the corporation assists the exporters through special

schemes, such as packing credit guarantee, post shipment credit

guarantee and Export finance guarantee. It is wholly owned by the

Government of India and works on no profit - no loss basis. To suit the

varying needs of the exporters. The corporation provides different types

63

of cover packages which may be divided in to following three broad

groups.

I. Standard policies insured to exporters to protect them against the

risks of trading with overseas buyers on credit terms.

II. Financial guarantees issued to banks against the risks involved in28providing credit to exporters '

The E.C.G.C bears the main brunt of the risk and pays the exporter

90 percent of his loss on account of ‘commercial ‘risks and political

risks.

11 EXPORT IMPORT BANK OF INDIA [EXIM-BANK]

Export Import Bank of India was established on January 1, 1982 for

the purpose of financing, facilitating and promoting foreign trade of India. It

extends finance to exporters of capital and manufactured goods, exporters of

software and consultancy services and to overseas joint ventures and turn key

construction projects abroad. The bank is the principal financial institution in

India for coordinating the work of institutions engaged in financing export and

import trade29.

3.10 PUBLIC SECTOR TRADING CORPORATIONS

With the idea of supplementing the efforts of private sector In the

fields of foreign trade. Government of India has also set up a number of

institutions such as Government trade Corporations, which include the

64

state trading corporation, the Minerals and Metal 'trading Corporation,

^pices’trading corporation, and Metal scrap trading corporation. Each of

these corporations are having a subsidiaries at state levels. After the

wave of new economic package reforms in India, all most all these

subsidiaries have been made full fledged Autonomous bodies and the functions of these organizations are being examined from time to time30.

3.11 EXPORT ORGANISATIONAL SET UP AT STATE LEVEL

The state Governments are increasingly participating in export

promotion of the country. Some state Governments have created

Independent Departments of Trade and commerce and a minister has

been put in charge of it. Some states have also been set up Export

promotion boards and export corporations for stimulating export items

originating form their respective states. Liason officers have also been

appointed by the states to develop export trade and maintain links with

the central Government Departments and organizations. Export

promotion Advisory committees have been established by some states

under the chairmanship of the chief ministers or the minister for

Industries at state level.

All these institutional efforts have gone a long way in creating

export atmosphere in the country and also stimulating the export base of

the economy. The statistical Data being available exhibits that all these

Institutions have provided stimulus to the export base and have

contributed for the country’s export promotion in a considerable

manner.

65

REFERENCES

1. Govt, of India ‘Compiled from various annual reports of ministiy of

commerce’’, New Delhi.

2. Ibid.

3. Ibid.

4. Ibid.

5. Ibid.

6. Ibid. '

7. Ibid.

8. Ibid.

9. Ibid.

10. Ibid.

11. Ibid.

12. Ibid.

13. Ibid.

14. Ibid.

15. Ibid.

16. Ibid.

17. Ibid.

18. Ibid.

19. Ibid.

20. I.I.F.T “Annual report” 1991-92.

21. Ibid.

22. Ibid.

23. Ibid.24. Ibid.

66

25. Ibid.

26. Ibid.

27. Ibid.

28. Ibid.

29. Ibid.

30. Ibid.